Despite a strong showing during the first 10 months of the year, tax revenue was down last month in Kentucky, dashing hopes of a sizable surplus at the end of the fiscal year on June 30.
State revenues are still expected to have grown by 3.9% over the fiscal year, slightly above the rate the state estimated and budgeted for of 3.2%.
“Monthly revenue collections were hampered by declines in several accounts, some expected and some not,” state budget director John Chilton said in a news release.
Some of those “expected” declines include revenues from taxes on insurance premiums, limited liability entities and coal. Coal severance receipts have fallen every month this fiscal year, with a total decline of 32.2%.
Unexpectedly, revenues from the state income tax declined 14.8% for just the second month this fiscal year.
In all, May receipts into the state’s general fund fell 7.5% compared with May of last year — a decrease of $57.3 million.
Receipts into the road fund also took a hit, falling 5.9% during May. Most of that decline was due to a 22.6 percent drop in revenue from the motor vehicle usage tax, which is collected when a vehicle is first registered or there is a transfer of ownership.
In October, the state’s Consensus Forecasting Group predicted that the general fund would end the current fiscal year with a $242.3 million surplus, an estimate touted by then-Gov. Steve Beshear as a highlight of his outgoing administration.
Before taking office, Gov. Matt Bevin provided a gloomier assessment of the state’s economic health, citing a report from the outgoing budget director that predicted a $500 million shortfall by the end of the fiscal year.
There’s still one more month in the fiscal year. According to Chilton, the state will avoid a shortfall as long as June receipts aren’t more than 2.9% less than June 2015.
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